Is it really so naughty to take full lump sum when you don't need it?

german_keeper

kinger101 wrote: »

One thing to consider with taking a large lump sum you don't need from a DC scheme is you'll be moving it outside of an inheritance tax wrapper. If there's any possibility your estate will exceed the IHT threshold, might be more sensible to leave it in the pension as cash or gilts.

Thanks, interesting and probably not something I was aware of but lottery win notwithstanding I don't think we will be troubling the scorers on IHT.

atush

Nothing naughty about deciding how to invest your savings.

Having said that, if you like a flutter at the races, iu am surporised at yoru attitude to investing. Esp as your general costs are covered by your DB pensions. And esp as if you stick to funds or trusts, you dont lose all your money, as they are collective investments. And you really dont lose anything unless you sell during a rout.

I am the opposite, dont really like gambling (although i do as my husband does- i just set a small amount each time) but i do beleive in investing.

A different way for you to look at things is that you have DB pesnions which are guaranteed. So you can afford to take more risk with your DC funds '(and or svings) as a result.

As far a Lump sums are concerned, in your case you will always be above your PA. So taking part of your TFLS with each drawdown will minimize tax. And as above, taking it out exposes it as part of your estate.

Thrugelmir

german_keeper wrote: »

Hello Thrugelmir, really sorry but I am not sure what your £12k figure is.

Your DC pot is projected to be in the region of £50k. (I merely made allowance for the fact that markets may drift and that your wife's TFLS would compensate). Projections are always best made conservatively. Markets can be volatile and unforgiving.

LHW99

You could always keep 2-3 (or even 5) year's income requirement in the DC pension, as cash, and top it up from the invested part each year as you drawdown / crystallise. Then if you don't need so much some years you can leave it in the pension for the future.

marlot

german_keeper wrote: »

...My DB is currently £9k increasing by CPI, my wifes is £6k increasing by RPI. Looking to retire at 60 in 4 1/2 years. ..

Unfortunately RPI is set to RIP.

https://www.gov.uk/government/publications/a-letter-from-sajid-javid-to-lord-forsyth-on-the-launch-date-of-the-upcoming-joint-consultation-on-the-retail-prices-index

RPI is likely to be phased out by 2025, so both pensions will likely rise by CPI. :-(